XAU / USD Clings to Modest Recovery Gains Though Lacks Continuation

• Gold quickly reverses an intraday decline near the $ 1,800 level, at multi-week lows.
• The appearance of some lower level buying warrants some caution for aggressive bears.
• A sustained move above the 50 hourly SMA is needed before positioning for additional gains.

Gold has posted a good intraday rebound, from near the $ 1,800 level at a seven-week lows, although it has struggled to capitalize on the move. At the time of writing, the precious metal is trading with modest gains, around the $ 1,835-30 region, and remains capped below the 50 hour SMA at the start of the US session.

Meanwhile, the initial drop has confirmed a short-term bearish breakout of a week-long trading range and supports the prospects for further weakness. The negative outlook is reinforced by the fact that the oscillators on the daily chart have started to move into bearish territory.

That said, the emergence of some lower level buying warrants some caution for aggressive bearish traders. This makes it prudent to wait for some continuation selling below daily lows before positioning for any further bearish movement amid the prevailing cautious sentiment in the stock markets.

Concerns about the possible economic consequences of the coronavirus have weighed on investor sentiment. This, in turn, has been seen as a key factor that has offered some insurance to the safe-haven XAU / USD and has helped limit deeper losses, at least for the moment.

On the other hand, a sustained strength above the 50 hourly simple moving average, currently around the $ 1,840 region, could trigger some short covering movement. However, any significant positive movement could still be seen as a selling opportunity and risks disappearing near the high resistance zone of $ 1,858-62.

XAU / USD 1 hour chart

XAU / USD technical levels